WAREHOUSING OPERATIONS AND STOCK CONTROL COURSE OUTLINE

1. Introduction To Warehousing

- meaning of warehousing, role, types

- Relationships between warehousing as

2. Receiving and Issuing Goods

- Meaning of receiving and issuing

- Sources of material requisitions

- Procedures in issuing and method of issuing goods

3. Classification and coding materials

- importance of classification and coding of materials

- Criteria of coding

- Types of symbols used to code

- Features of a good coding system.

4. Stock location

- Purpose of stock location

- Factors to consider when selecting stock location and methods of stock

locations.

5. Stores layout.

- Meaning of store layout

- Factors to consider in selecting stores layouts

- Types of stores layouts.

 - Features of a good stores layout.

6. Materials preservation

- Importance of material preservation

- Factors considered in selecting material preservation methods

- Methods used in preserving materials

7. Packaging

- Purpose of packaging materials

- Factors to consider in selecting and packaging materials

- Types of packages

8. Materials Handling

- Objectives of materials handling

- Factors to consider in selecting materials handling equipment

- Principles observed in handling materials

- Types of materials handling equipment

9. Inventory Management / Stock Control

- Reasons for holding stock

- Importance of stock control

- Factors to consider in selecting stock control methods

- Stock control methods.

10. Stock Recording

- Importance of stock recording

 - Factors to consider in selecting stock recording methods to use

- Stock recording methods

- Types of stock records.

11. Stock Taking

- Reasons for conducting stock taking

- Factors to consider in conducting stock taking

- Methods of stock taking

- Preparations of stock taking

12. Safety and Security

- Meaning of safety and security

- Importance of safety and security

- Factors to consider in relation to safety and security of stock

- Store and staff.

13. Emerging Issues and Trends in Warehousing and Stock Control

- Challenges posed by emerging issues and trends

- Copping with challenges issues and trends

- Warehousing operations and stock control.

Books

1. Storage and supply of materials by Daniels Jessop & Alex Morison

2. Purchasing and Supply Management

WAREHOUSING

- A warehouse is a commercial building for storage of goods and materials

- A warehouse is a storage facilities goods / materials as received stored

and later moved to the plant for production process or to the ultimate

consumer.

- Warehouses are used by manufactures, importers, exporters, wholesalers,

transport businesses customs departments etc.

- They are usually large plain buildings of in industrial areas of cities and

towns.

Common Terms

1. Stores

Store means unworked materials, materials not processed.

2. Store Room

This is the place where stores are housed.

3. Storage

This is the physical holding of stocks or supplies awaiting issues or supplies to

customers.

4. Store Keeping

This is the aspect of materials control concerned with the physical storage of

goods.

5. Store management
Some deals with planning, co-ordinating and control of various activities

pertaining to efficient and economic storage and store keeping.

6. Stocks

Stocks are items held in the storehouse pending use or issue

7. Supplies

Supplies are all materials goods and services used in an enterprise regardless

of wheather they are purchased outside transferred from another branch of

manufactured inside.

8. Customer

Customer is a term applied to internal and external purchasers and users of

stocks and supplies.

SUPPLY FUNCTION

- The control of inventory and management of supply is a specialist activity

- The supply function has a responsibility for;

i) Receipt – goods must conform to specifications

ii) Custody – ensure security and safety.

iii) Distribution of very large sums of money worth of goods.

iv) Determination of appropriate quantity of materials to be held in order

to ensure operational needs are met in the most economic manner

possible.
ROLES / USE / FUNCTION OF A WAREHOUSE

The primary objective of a warehouse, is to provide services to user departments

which include;

1. Making available as balance flow of materials as and when needed so as to

meet operational requirements.

2. Account for all receipts, issues and goods in store.

3. Safe custody of all materials working progress and finished goods and

safeguard them against theft & deterioration.

4. Cost reduction. An organization is able to take advantage on economies of

scale ( benefits of buying in bulks)

5. Receives inspects and stores the materials

6. Serves the purpose of stock control

HOW WAREHOUSING ADDS VALUE TO AN ORGANISATION

1. Breaking bulk

- Breaking bulk is where goods are supplied in large quantities because of

economies of scale.

- This saves the organization money as they enjoy huge discounts and then

issuing the goods in small quantities to customers and users.

- The warehouse therefore assists in a more efficient matching of demand

and supply

2. Creating bulk
 - It may be in a case of certain product produced in certain small quantities

at different locations and need to be brought together into larger loads for

economic shipment to the market or user.

- The accumulation of small quantities into large quantities to be processed

or transported is a way that a warehouse adds value to an organization.

3. Smoothing

- In manufacturing supply and demand of finished products is never the

same and so a warehouse smooths the fluctuating demand and supply by

ensuring that manufactures always produce to capacity but keep away the

excess to supplies to meet the demand when it will outstrip supply.

4. Combining

- Materials are sold in retail outlets from different sources.

- A warehouse acts as a store for these items from different sources and

hence meets the tastes and preferences of all customers, consumers and

users.

- Raw materials for manufacturing process may be from different sources

and a warehouse brings them all together to be used in the manufacturing

plant (process).

- This is combining as a way of adding value

5. Cutting down cost

 - Through proper storage, materials handling & classification

standardization, proper specifications etc.

- A warehouse helps an organization cut costs.

ADVANTAGES OF WAREHOUSING

1. Goods can be prepared for sale when in the warehouse (in bond)

2. Importers can look for market before paying duty

3. Goods sold on bond, the duty passes to the buyer.

4. Warehouses enable the government to check on prohibited goods and

smuggling

5. Duty paid for goods in the warehouse is revenue for the government

6. Some goods lose weight while in the warehouse and so if duty is paid

according to weight then the duty paid becomes less.

Logistic – system of moving an item

7. Buys goods at low prices and when prices shoot up they sell them at high

prices making a lot of profit.

DISADVANTAGES

1. A warehouse holds a lot of capital in the form of raw material work in

progress (WIP) stock in finished goods which may affect the other operations

of the firm.

A firm may run into cash flow problems.

2. Theft is common via warehousing since the staff may not make regular

checks to some parts of the warehouse

3. Initial capital investment in the construction or leasing of a warehouse is very

high and add to the expenses of the firm.

4. When goods are procured at a high price and then the price falls in the

market it becomes hard to sell them.

5. Hold – holding goods in warehouse to create artificial shortage and price.

METHODS OF WAREHOUSING

There are three methods of warehousing

1. Centralized w/h

2. Decentralize w/h

3. Combined w/h

CENTRALIZED WAREHOUSE

A centralized warehouse is a warehouse that is set up to take care of all the

needs of an enterprise together with all departmental needs.

The warehouse is located at one central place where all departments visit for all

their requisitions.

ADVANTAGES (BENEFITS)

a. Improvement in handling procedures via training of warehousing staff.

b. Avoids duplication of records and activities.

c. Use of modern technology, inventory software and equipment is possible.

d. Easy co-ordination btwn warehouse departments

e. Consistence in quality is assured.

f. Enterprise can benefit from economies of scale via buying in bulk.

g. Storage costs are low due to the economies of scale in storage

h. Overheads are shared btwn departments.

DISADVANTAGES

a. Rate of material deteriolization is likely to be high.

b. Distance btwn warehouse and departments may be so far hence time is

wasted in making requisitions and collecting issues.

c. Cost of the inventory tends to be high due to the fact that the warehouse

staff is not close to the department to know the rate of turnover.

d. Procurement procedures are lengthy and hence stock-outs are common.

Additional Notes

For manufacturing firms a warehouse main function is to provide service to the

operating departments. This service can be divided into five parts namely:

a) To make available a balanced flow of materials components, tools, equipment

and any other materials necessary to meet operational requirements.

b) To provide maintenance repair and operational (M.R.O) Material requirements

as well as spare parts and general stores requirements.

c) To receive and issue work in progress (WIP) and finished products

d) To accept and store scrap and other discarded material as it arises.

e) To account for all receipts, issues and goods in stock.

A warehouse is therefore not a subsiding of other departments but is currently

considered a department in its own might considering the cost implication it

carries to the overall performance of an organization

DECENTRALISED WAREHOUSE

This is where each department stocks it s won materials in a warehouse where

receipts to receive goods and issues are made.

ADVANTAGES OF DECENTRALISED WAREHOUSE (BENEFITS)

i) Individual needs of departments are well taken care of due to the small

staff and the inventory in question.

ii) Issuing is easy as there is little beurocracy for departments and

warehouse

iii) There is closer relationship with suppliers.

iv) Local suppliers and consequent lower transportation costs.

DISADVANTAGES.

1. Capital investment of constructing or leasing on each warehouse is very

high.

2. The overheads for each warehouse add up to the big overall expenditure

for enterprise.

3. Warehouse staff report to many live manager that there is confusion.

4. Co-ordination btwn department doesn’t exist in procurement procedure

and so a lot is spent o repeat purchasing.

5. Decentralized warehouse increases the cost of production thus making the

products not competitive into the market.

COMBINED WAREHOUSE

- This is where an organization has a main warehouse where productions of

every department are kept before dispatching them to various warehouses

for each department.

- It has the features of a centralized and decentralized warehousing but in

one organization.

FACTORS TO CONSIDER WHEN SETTING UP A WAREHOUSE

1. Availability of space – since a warehouse needs space for packing of

large vehicles and expansion due to changes, a warehouse needs to be set

up where there is enough space.

2. Infrastructure – a warehouse should be situated at a place which is

linked by advanced roads roads for easy movement in and out of the

warehouse.

3. Location – a warehouse must be situated to the users convenience eg.

Warehouse for export purposes should be located near airports and sea

ports.
 4. Handling facilities – when setting up a warehouse, the equipment to be

used in the handling of materials have o be put into consideration.

Whether cranes, robots, hand carts etc provision must be made as the

warehouse is being established.

5. Capital - consideration must be given to the amount of capital at a hand

for construction and the size of the warehouse to be constructed.

6. Government policy - Construction must be undertaken following the

government rules and regulations for safety health of the staff and policies

on urban planning.

7. Labour – labour will be required for the handling of goods so it should be

situated in a place where there is both skilled and unskilled personnel so

as to facilitate the running of a warehouse.

TYPES OF WAREHOUSES

- Warehouses can be classified in terms of ownership, terms of goods

stored, and basis of ownership and the activities undertaken in the

warehouse.

- Warehouses can be private or public.

PRIVATE WAREHOUSES

- This are warehouses owned and operated by manufactures to fulfill their

own storage needs.

- Goods are kept/stored in the warehouse and released as need arises.

Examples

a) Wholesalers w/h

b) Manufactures w/h

c) Retailers w/h

RELATIONSHIP BETWEEN WAREHOUSING DEPARTMENT AND OTHER

DEPARTMENTS

- To discharge each responsibility adequately, the warehouse must actively

co-operate with other depts. Not only to provide the services but also to

give and receive information so that it s services are efficient.

A TYPICAL WAREHOUSE OPERATION CYCLE

USER DEPARTMENT 1.Requisition WAREHOUSE 3.Issue Records STOCK CONTROL

2. Goods 10. Receipt Records

4. Request
8. Goods 11. Recent Records to order

5.Enquiries
PAYMENT SUPPLIERS PURCHASE
13. Payment 6.Quotation
SECTION
7.Order
9. Invoice

12. Verification of Invoice

KEY

1. User departments submits requisition to stores

2. User department is handed goods if they are available

3. A record of issuer is transmitted to stock control

4. Assuming that it is time to do so, a request for an order is forwarded to

purchasing department taking lead time and company inventory polices into

consideration.

5. Purchasing department send out enquiries to prospective suppliers.

6. Quotations are submitted by suppliers

7. Orders are placed with selected suppliers

8. Goods are received and sent to the store

9. An invoice is sent by supplier to purchasing department

10. Record of goods received is sent to stock control.

11. A record of goods received is sent to purchasing department from the

stores.

12. Purchasing dept. varies invoice and forwards it to finance for payment

13. Finance dept writes the cheque for the supplier.

ACTUAL RELATIONSHIP BETWEEN WAREHOUSING AND OTHER

DEPARTMENTS

1. Warehousing and products

- The warehousing production function

- Give information on production schedule

- Sends in work in progress to appropriate warehouse.

- Excess material and equipments not currently required to the warehouse.

WAREHOUSING ROLE IN PRODUCTION

1. Provide materials, tools and other equipment and supplies that are required in

appropriate quantities on to meet factory programmes/schedules.

2. Advice product on anticipated difficultly on failure in its supply.

3. Notify manufacture of any substitute on supplies material available.

4. Accept work in progress (WIP) and finished goods from the production debt.

5. To receive scrap, culpits, rejected and salvaged and reclaimed material so

that the shop flow may be promptly cleared.

RELATIONSHIP BTWN WAREHOUSING AND FINANCE

ROLE OF FINANCE

1. Control of working capital allocated to finance stock

2. Finance dept also receives information or revision of prices.

3. Ensure strict adherence to laid down procedures

4. Gives information on the cost of materials.

Role of Warehouse in Relation to Finance

1. Information on obsolete damaged and supplies stock

2. Information on availability of stock.

WAREHOUSING AND MARKETING DEPT

- Marketing is involved in actual advertising and releasing of goods

- Warehousing provides information on the availability of goods and stores

free samples and advertising materials for marketing dept.

- Warehousing department on the other hand requires in order to advice

production department to change their production studies.

- This information is given by marketing department.

RELATIONSHIP BTWN WAREHOUSING AND DESIGN ENGINEERING

- The two departments together with others cross – functional teams work

together with specification design, standards and modification of products.

- Warehousing department also communicate to the design and engineering

dept about obsolete and slow moving items.

RECEIVING AND ISSUING GOODS

1. Receiving

- Receiving is the term given for the process of receiving materials from

suppliers, production dept and other dept to be used.

2. Issuing

- Issuing means the supply of material to the store from the various

department of an organization in w/h materials are received from.

1. Suppliers – these are goods that have been purchased by an

organization
 2. Production department finished goods, excess raw materials working

progress, scrap waste and rejects.

3. Other departments. Scrap, goods issued in excess and prepared

ones.

FACTORS TO CONSIDER WHEN RECEIVEING GOODS

1. Nature of goods

Whether they are fragile, perishable, heavy flammable etc

2. Which is the consuming departments – deposit supplies/goods near the

department.

3. Handling equipment needed should be organized before the actual day of

receiving goods.

4. Special requirements for hazardous materials especially for chemicals.

5. For international purchasing, documentation needs to have been done

precisely and appropriate taxes paid

6. For goods that need inspection, an inspection area should be set aside.

7. Availability of inspection tins for materials been inspected

8. Security – must be able to provide effective security for the goods stored to

minimise theft.

PREPARATION FOR RECEIVING GOODS

- Procedures to stream the receiving activities in an organization can reduce

the time spent and the cost of the receiving process

- The preparation involves.

1. Receiving shipping documents with the connection of the arrival of the

transporter.

2. Using these documents the warehouse &staff is able to estimate the space

required for the material and the time required to unload the items on the

delivery manifesto. These will help in the acquisition of the handling

equipments for the materials.

3. A staging area is then reserved to receive the shipping vehicle.

4. Collection of identifying of data from the container to be unloaded from

the shipping vehicle is then done.

5. This is to see whether they matches the delivery manifesto

ACTUAL RECEIVING PROCEDURES.

- In receiving materials the purchasing control document, meets the physical

materials themselves.

- Most problems and errors in a purchasing transaction should come to light

during the receiving operations.

- If the problem is quality, shortage, damage, incorrect items etc and is not

detected and corrected during the receiving operations the cost of

correcting the mistake later is always higher.

- The receiving report completed upon receipt of a shipment it the only

document a firm has that details the materials it actually received.

- It also contains important supplier information e.g. Delivery timing,

shipment damage, reject percentage, split shipment etc.

- This document is later used as the basis of invoice payment, for continued

purchasing negotiation and closing he order.

- Poor receiving performance can produce serious /costly consequences.

Receiving should therefore be supervised by a senior warehousing officer

and a person who is reasonably familiar with the physical characteristics of

the materials and who is capable of exercising sound judgment where a

choice of alternative should be made.

RECIEVING PROCEDURE

- A typical receiving procedure consists of four steps.

1. Unloading and checking shipment.

- The number of containers unloaded from the carriers vehicles is checked

against the carriers manifesto (fright built).

- To make certain the full consignment have been delivered all containers

are also inspected for any external damage, any damage found is

inspected by the carriers representative and noted on the receipt which

the receiving clerk signs.

- Failure to follow this procedures before accepting a shipment can relieve

the carrier of al liabilities except for availability of concealed damage into

evident until the container is unpacked.

 2. Unpacking and inspection of materials.

- A receiving clerk is held responsible for verification of;

a) The materials received against the sellers packing & used and against a

copy of the firms purchase order to verify that the correct items have been

shipped.

b) The quantity of shipment should be verified I the same manner.

c) General inspection on the condition of the materials to determine whether

internal damage was incurred.

3. Completion of receiving report

- After inspection the receiving clerk receives this form by recording of the

items received. Indication those which are open and including any other

useful information.

- In many firms there is a company software which updates the stock

balances where, when materials are received, the following dept are

notifies and these are:

1. The user departments – the one that orders the goods.

2. Purchasing dept – the one that procures the goods.

3. Inspection – responsible for inspecting the goods.

4. Accounting dept – responsible for paying.

4. Delivery of materials.
 - For non-stock materials, the receiving dept is usually responsible for

delivery the user dept for other inventory materials

- The receiving dept will do the delivery against requisition.

TEN STEPS IN RECEIVING AND INSPECTION PROCESS

1. Confirmation of carrier/vessel

2. Confirmation of destination

3. Confirmation of documentation

4. Off loading

5. Confirmation of packages

6. Physical checks

7. Quantity and quality checks

8. Preparation of relevant documents

9. Storage/ rejection of goods

10. Adjustment of stores ledgers

SOURCES OF MATERIAL REQUISITION

- There are two material requisition

1. User department (internal customer)

- This is an internal requisition document. Most firms use standard serially

numbered requisition forms for requests originating in the operating

department

- Every requisition should contain the following:

 a. A description of the materials.

b. Quantity

c. Date required

d. Estimated unit cost

e. Operating account to be charged.

f. The date

g. An authorized signature

- With advanced technology large organizations scan item as through their

computer terminals and requisition electronically.

ISSUE OF MATERIALS

- Materials are issued on a written requisition by the department which

submits to store keeper requiring him/her to issue the materials noted in

the requisition slip.

- A requisition is therefore a written authority for stores to issue materials to

any person or section of the organization entitled to draw materials form

the stores.

- No issue is made from the store without a proper requisition.

2. EXTERNAL CUSTOMERS

- This is the consumer of materials from outside the organization

- Delighting the customer is exceeding customer expectations and this should be

the main objective of every organization.

- The store keeper is informed of issues to be made through,

i) Salon advice note

ii) Issue order

iii) L.P.O. Form and external customer (intent)

PROCEDURE FOLLOWED IN ISSUING GOODS (FINISHED PRODUCTS)

1. The store keeper receives the authorized issue note from internal or

external customer.

2. Depending on whether the issue is immediate or at a future date, the store

keeper then selects, packs and dispatches goods according to instruction

given.

3. The transaction is then documented or keyed in the computer system

4. An advice note and packing note in then prepared by the issuing dept.

HOW TO CONSOLIDATE MATERALS FOR AN ISSUE NOTE

PICKING

- In this system the store keeper “picks” the materials from their respective

locations to satisfy an issue note

- This may be through:

i) Sectional picking

- Each section picks items that are in their section and hands them to the

section head who then hands them to the staff dealing with the issue note.

ii) Travelling picking

 - In this system the store staff dealing with an issue note collects all the

materials on the issuer note from wherever they are located in the store

house

iii) Marshalling

- In large organization with large warehouses, an order from one customer

may have materials from various sections.

- Each section is given a copy of the consignment

- Each section then selects goods on the consignment from the section and

puts them in a “marshalling area”

- This process is called marshalling.

- When each section has marshaled all materials under them, then it is

checked off by a dispatcher before it is loaded on an outgoing vehicle.

METHODS OF ISSUING MATERAILS FOR INTERNAL USE

There are three ways to handle issues

a. Immediate issues or presentation of approved requisition by hand.

b. Issues made on receipt of issue note by post.

c. Immediate issue on verbal request only.

Issues on request has three methods.

1. User departments representatives presents and approved requisition, the

store keeper selects the items wanted and hands them over the

departments representatives.
 2. User departments hands over authorized issue note to store house but

delivery of materials is done at a later date when the user department calls

for them or there is a pre-arranged time.

- The store staff has time to select and marshal the materials while the user

department representatives doesn’t have to wait for the materials.

3. The user department calls the store and verbally orders for materials. The

store staff then hand over these material. This is done for materials of a

low value which are required at a short notice. Eg nuts, bolts, soaps etc.

METHODS OF INTERNAL ISSUES

-There are various methods used in issuing goods or materials internally for

production purposes including:

1. Imprest issues

2. Replacement issues

3. Loan issues

4. Issues to employees on payment

5. Allocated issues

6. Delivery & collection issues

7. Bulk issues

1. IMPREST ISSUES

In the impress system list of certain materials are given from the store house to

sub-stores in readiness for the production line.

- Consumption goes on for a given period after which the user prepares a

list of the materials consumed during the time and prepares an issue

document for materials consumed so that thestock is restored to its

original level at the beginning of the period

2. ALLOCATED ISSUES

- Using the production schedule some materials may be received for a

specific product programme.

- The materials are then placed on the production line so that there is no

interruption when another programme is through

- Another type allocation is when goods that are used by different

department are bought but special instructions issued that they are only

for a certain tasks such materials can’t be issued for any other task or to

any other department.

3. SCHEDULE ISSUES

- In large scale production, production materials are issued in quantities and

types that are in line with the manufacturing schedule.

- All the materials needed for a particular manufacturing process are

marshaled.

- The production manager issues the production schedule to the store

keeper who has a list of the materials needed for each process.

- The marshaled materials are then delt with in either of the following ways;
 1. Collected from the store by production department

2. Delivered to the production department by store – staff

3. Transferred to ‘open access’ stores within the production shops – this are

non enclosed areas fitter with bius and racks wit materials.

The production staff can then use them without documentations.

4. REPLACEMENT ISSUES

- In this issues certain items used by technical staff are issued to the user

after presentation of the used one the the store keeper eg pangas, files

etcs

- Issue notes aren’t necessary.

CLASSIFICATION AND CODING OF MATERIALS

MEANING OF TERMS

1. Materials

It is a term describing goods which are held by business enterprises. These

are the items held with objective of using them in the production process,

operation activities and as finished products held for sale

2. Stock in trade

This is the material held for the purpose of resale to make a profit

3. Raw materials
 These are materials that undergo production manufacturing process into

finished products eg. Timbers, steel etc. the finished product of one

industry is the raw material for another.

4. Piece part

These are small components manufactured from raw materials.

5. Bought parts

These are finished parts of assemblies purchased from outside suppliers to

be used in the manufacture of finished products or sold as spares and

accessories eg. Motor manufactures by different parts from different

suppliers/ countries.

6. Equipments & spares

Include machine installations and vehicles and the allocated spare parts.

This is stock that is important in industries, agriculture, armed service etc.

7. Tools

They are used on machines. May be hard eg hammers, screw drivers or

portable electric eg drills and pneumatic tools

8. Ganges

This are devises for measuring the dimensions of shops of materials or

components. They include collipe, plug screw gap and form gauges

9. Figs and fixtures

 These are pieces of equipment especially designed for handling materials

or parts while undergoing machine fitting assembly or other processes in

manufacturing.

10. Work in progress

These are incomplete items in the course of manufacture. They are the

result of different manufacturing processes and operations. Having W.I.P

helps to keep the production process continuous without interruption.

11. Packaging materials

This is everything used for packing including wrapping materials eg paper,

straw rope, metal binding, container such as boxes crates, drums, bottles

etc

12. Scrap and residue

This is the waste used materials or supplies materials or parts arising out

of the manufacturing process eg saw dust, rejected components, engine

oil, ash, obsolence machinery etc.

13. Free issue material

These are raw materials or components of an equipment/item for lim.

They remain in the manufactures premises and remain in the customer eg

in gonte contract.

14. General material

 These are every materials that don’t fall under any of the above

categories. They are also important as they facilitate smooth

manufacturing process e.g cleaning materials protective clothing, paints

nuts, bolt, grease.

There are commonly referred to as M.R.O – Maintenance Repairing and

Operating items

Classification

Materials are classified into 5 categories:-

- Raw materials

- Purchased parts

- Work in progress

- MRO Supplies

- Coding

Every item in the five categories of classification is well known to all who use

them in the factory instead of having a lengthy description of the different items

of the same item eg raw material, timber, glue, oil etc

A logical system can be used as a basis of identification of every item had in the

store this can be done using figures letters. This system is called coding.

Each business using the type of coding system that fits them considering the

nature of items the purpose for which items are employed or circumstances of

operations.
CLASSIFICATION AND CODING OF MATERIALS

CLASSIFICATIONS

Classification refers to putting similar things together to make it easy to

retrieve/access them. The act of distributing things into classes or categories of

the same type is what is called coding.

Coding

It refers to a logical system used as a basis of identification of every item hold in

the store.

Numbers, letters or the combination of the two can be used for identification

IMPORTANCE OF CLASSIFICATION AND CODING

1. Avoids repeated use of long descriptive tittles . The full and accurate

descriptions are used in store but the clerical staff only deals with the

numbers letters and combination.

2. It accurately identifies all items

a separate code is available for every individual type of item in all different

sizes indication the specifications and special characteristics.

3. Prevents duplication of items because they are arranged in a logical manner.

Similar stores are grouped together and the coding on every material should

be done only once.

4. The presence of a code number on all basic material documents for example

invoice enables them to be sorted into code number order.

5. It provides a reliable index for all items. A catalogue can then be created to

be used when in draughts.

6. Traceability is facilitated ie easy location of an item.

7. It can be used as a store house location ie items can be arranged according

to the sequence of the stores coding systems.

8. Enables the application of commuter applications which avoids long

descriptions.

9. Improves stock recording and control enabling buying instructions to be

conveyed easily and quickly.

Principle systems

TYPES OF SYMBOLS USED IN CODING MATERIALS

1. Numbers – this is called the numerical system where numbers are used in

coding materials

2. Letters – this is where the letters of the alphabet are used

3. Alphanumerical – this is combination of the alphabet and the numerical

system

4. Decimal system – involves the use of decimal

5. Brischsystem – involves the use of the numerical system

6. Kodak – it uses numbers for coding where hyphens involves both use of

hyphens and decimals.

 FACTORS TO CONSIDER IN CODING OF MATERIALS

1. Cost - the coding system shouldn’t be expensive

2. Nature of material - According to their characteristic materials of a similar

nature should be coded together on a similar number

3. Technology. - The coding system should be complain for the level of

technology of the firm

4. The users – the system should be simple and easy to understand by the

people using it.

FACTORS TO CONSIDER WHEN CODING MATERIALS

1. Nature of goods

2. Cost of goods

3. Users

4. Technology

5. Future expansion

BASIS OF CODING MATERIALS

1. Nature

2. Technical affinities

3. Stage of manufacture

4. Colour markings

5. Manufactures code/suppliers code

 FEATURES OF A GOOD CODING SYSTEM

1. The coding system should cover the whole range of materials in use or likely

to be used in feature. In the first stages of implementation, about 70% of

the code capacity should be unused.

2. Classification should be designed to meet the needs of the organization.

3. The number of letters or digits should be constant on all items.

4. Numbering should be arranged so that there is adequate room for future

expansion or amendment without the risk of duplication or changing existing

numbers.

5. There is one place and one code only in the vocabulary for each item.

6. Units of issue should be given

7. Descriptions should be brief and accurate and specification quoted where

necessary.

8. It should be easily understood by all those who use it.

STOCK LOCATION

Meaning of stock location

- Stock location is the name given to the system that is derived to allocate

each item to be stored in the warehouse a certain location within the

warehouse.

- The warehouse is divided into sections each of which is given a number or

letter depending on the classification and coding system in use.

- Each stake of storage fixtures in a section is given a number or letter from

one end to another.

- Each bay of shelving or rocking forming a stack is then similarly identifies.

- This labeling goes all the way to individual being opening that has a number.

- This system provides location symbols which assists the users to locate

whatever items required with ease.

- The labeling system is then supported by a stock location index which is a

complete list of all items held in the warehouse with their respective specific

locations.

- This stock location index assists all users of the warehouse to locate items

quickly during issuing and receipts since sometimes the warehouse is too

huge for the users to mentally master the location of all items.

PURPOSE OF STOCK LOCATION

1. At a glance, the warehouse staff is able to identify where materials are

located in the warehouse that easing issuing and receipt procedure.

2. Stock location separates materials that shouldn’t be stored together thus

ensuring that safety measures are taken while at the same time ensuring

that each item is kept in the most conducive environment to ensure long

life and that quality is maintained

3. Stock location ensures that materials of similar nature are used together

are located together for ease of retrieval

 4. Stock location is also meant to ensure that there is minimum traffic for

both materials and staff in the course of receipt and issue.

5. Stock location also ensures that items that can easily be stolen are located

in the warehouses managers office or kept away from gang-ways where

they can be picked by passersby.

6. Ensures safety of the staff by putting the harmful /dangerous materials

away from staff.

FACTORS TO BE CONSIDERED IN SELECTING STOCK LOCATION

METHODS

Several factors need to be considered before settling for a stock location method.

These factors include:

1. The nature of materials

Some materials require specific storage conditions and this should be considered

when selecting their location within the warehouse.

2. Frequency of issue and receipt

Materials whose rate of consumption is high and therefore are issued and

delivered by suppliers at regular intervals should be located near the entrance of

the warehouse in order to minimize distances travelled by staff in the course of

issue and delivery.

3. Value of materials
The value of materials should also be considered so that materials of low quality

and frequently used should be located at very convenient locations within

the warehouse where everybody has access. However, materials of high value

and issued at rare location should be placed at areas where access is limited to

few staff numbers and preferably under key and lock.

4. Materials used within manufacturing process

Materials that are used together in the manufacturing processes should be up to

together in order to ease their issue to the production department.

5. Handling equipment to be used.

The equipment required in the handling of materials need to be considered when

selecting the location of such materials with the whsc..

Those that require heavy equipment should be located in areas within the

warehouse that can accommodate such equipment.

6. Control of deteoration and breakage.

Materials that are fragile should be kept away from gangways.

Those that have special instructions about their storage should be located in

areas that meet their special storage needs.

7. Materials that go together eg iron sheet and nails should be kept together.

METHODS OF STOCK LOCATION

There are three major stock location methods namely:

a) Fixed location
b) Random location

c) Zonal location

Fixed location method

This is the method where every item stored in a warehouse has a permanent

location assigned to it (a place for everything and everything in its place)

A good example of a fixed location method is how books are stored in most

public and institution library.

Advantages.

1. To have storage for each item means that warehousing staff after working

for a period time, they can master the various locations of items and therefore

improve in their level of working in times and accuracy.

2. Because items of similar nature will be adjacent to each other in the stored

location index, they are also likely to be stored near each other on the

warehouse floor. This further assists the warehouse staff in finding materials

3. At a glance you are able to identify the materials that need replenishing.

Disadvantages.

1. The introduction of new items and creation of extra space for storage is

difficult due to the fixed nature of how goods are located in the warehouse.

2. If the initial location of items had problems, then it means that their problems

have to remain in the systems as there is no room for change. This means
 that it is inevitable that items may be located out of sequence or the location

system has to be organized a fresh.

3. In an attempt to locate the items that are frequently used near the issuing

points in order to make work easier for the warehouse staff, then it may

mean that some items are located and of sequence.

4. This system makes it difficult to identify obsolescence and dead stock since

sometimes the warehouse for a long time of the location only has slow

moving items.

RANDOM LOCATION

- In situation where stores are first moving or storages space is scarce, and

expensive, it may be advantageous to employ a random location system.

- Random location system is however not disorganized or without pattern it

depends on a systematic and very highly organized approach to the

placement of stock

- Most random location systems are computer based due to the amount of

record keeping that their approach entails in the system when a delivery is

received. It is place in the first available space and the location is

recorded on the computer.

- As soon as a location is emptied it is immediately available of new receipts

of any item it is allocated items awaiting allocation and the computer

 system updates the information in the cross referencing of the item with

its location

- This system is particularly suitable for fast moving items like distributing

warehouse where items keep on moving from manufacturers to the

wholesaler

ADVANTAGES

i. it is ideal for goods that are of ordered and dispatched in batches so they don’t

need a permanent location in the warehouse.

ii. The system allows maximum use of space as there is no location that remains

free after all the goods have been issued that space is used for storage of

another items.

iii. The warehousing staff has the liberty of storing goods at eh nearest available

space therefore speeding up the delivery processes.

iv. There is great efficiency in the use of space and the ease with which

electronic data processing systems are employed to maintain the necessary

records.

This has made the practice of random location to be popular in any business

organizations.
 DISADVANTAGES

I. The fact that there is no permanent place for each item leads to

confusion of warehouse staff trying to locate the items during issue

processes.

II. There are major limitations if there are differences in size shape or

weight of materials being stalked.

III. Reference to the computer to determine the location of items necessary

before an issue can be made thus wasting time for items that possess

few deference in specification it is not uncommon for wrong issues to

be made when warehouse staff is not familiar with the items they are

issuing since the location keeps on changing.

IV. The warehouse staff doesn’t specialize in identifying the specialization

since they keep on changing thus the job remains to challenge even

after working in the warehouse for many years.

ZONAL LOCATION SYSTEM

- In the system, attention is given to the way in which materials are likely to

flow through the warehouse.

- A system is then designed to that saving of time and zones are established

for materials that flow together so that a number of issues on delivery can

be done at the same time without any interruption.

- In establishing these zones, the basic traffic control systems in large cities

are employed with a (one way) system of movement reduces congestion

considerably.

ADVANTAGES

A. Easy location of goods & issuing.

B. Several issues and receipts can be undertaken and the same time without

any confusion being created

C. Warehouse staff can be signed different zones which allows specialization

and thus efficient.

D. Materials that flow at the same time and in the same zone thus saving on

manpower and equipment used during their movement

E. Controls obsolescence of materials.

DISADVANTAGES

a. This division of warehouse into zones removes any sequence that may

otherwise help in storing similar materials together.

b. Zonal location index may present a challenge in that some materials that

flow together with others and in the same direction may not be conducive

to be stored together.

* May not be a convenient system

 c. storage of materials that are used for several purposes may be a challenge

and they can only be placed in one zone thus making it confusing when they

need to flow with others into the zone they are located.

FEATURES OF A GOOD STOCK LOCATON METHOD

1. A good method should ensure a minimum amount of both materials and staff.

2. Should guarantee single handling in the process of issue and receipt.

3. Locates goods in environments where they maintain their quality and protect

them from contamination.

4. Ensures a smooth flow of materials and staff without breakages and

accidents.

5. Makes maximize of available space without compromising on storage

requirements.

6. Allows warehouse staff to locate materials at the shortest time possible in

order to meet requisition needs form other departments.

STOCK LOCATION INDEX

In many warehouses materials are allocated space where large areas may be

marked with numbers or letters

A stores location index is then prepared which is used by staff or any other user

of the warehouse who may wish to locate a certain item or material within the

warehouse.

Definition
- The index is like any other index that lists all the items held in the warehouse

in an alphabetical order giving the respective location of every item hold in

the warehouse.

This means that anyone wishing to locate an item just confirms its location in

the warehouse from the index and picks it out form the location given.

PURPOSE OF STOCK LOCATION INDEX

1. A stock location index is meant to ease the identification of the location of

an item in a warehouse.

2. The index ensures that every staff who is not familiar with the

warehousing operation can be able to locate an item in the warehouse

when warehousing staff is not present or when staff is too busy.

3. The user of the under only needs to identify the item by name and by

tracking it on the alphabetical listing then can identify the corresponding

location on the warehouse floor.

DETAILS ENTERED IN A STOCK LOCATION INDEX

The warehouse stock location index will contain the following details

1. The name of the item or material

2. The details of the specification of the items in terms of weight, strength

colour or any other details that separate it from other similar items in the

warehouse.
 3. The quality details or supplier or manufacturer details that may interest

the user departments.

4. The numbers/letter of the general zone where the item is located

5. The specific rack, bin, pallet, cabinet etc where the item is located flowed

by any number that may differentiates it from other items stored in the

same location

6. The code number

STORES LAYOUT

Also collect warehousing layout

Stores layout is the system in which the warehouse or store is designed during

construction in relation to all the operations that are likely to be undertaken such

as control office, delivery area/ receiving area, issuing as well as maneuver of

vehicle and human traffic.

A good layout can

a) Increase output

b) Improve product flow

c) reduce cost

d) Improve service to customers

e) Provide better employee working conditions.

FACTORS TO CONSIDER WHEN SELECTING STORES LAYOUT

1. Flow pattern

The glow patterns should be with minimum crossing flows or back-tracking of

people or materials based on analysis of material and staff movement.

There should be good access to stock

2. The company’s financial resources

Some layouts are expensive and as the resources available for the company

should be considered where there is a warehouse.

3. Customer needs

The needs of customers needs to be considered before selecting a stores

layout.

4. Relationship btwn functional operations

The closeness of functions would dictate the layout eg. Shipping, receiving,

order picking, packing, inventory storage returning etc

5. Material handling equipment in receipt and issue processes. Material handling

eg in receipt and issue points to be close to each other.

6. Information flow

This direction that information should flow needs to be considered in order to

avoid information back tracking and double handling

7. Security and safety systems

- Where possible separate amount either and access doors for people and

mobile equipment need to be established eliminating dead areas in which

operators could be trapped.

- No aisles with closed ends should exist and provision for five escapes should

be made.

TYPES OF STORES LAYOUTS

1. Through flow

2. Line flow

3. T – Flow

4. L – Flow U – Flow (horse shoe)

- The flow of materials refers to the way in which materials flow through the

warehouse and considerable saving should be made of time and space.

- If there is need for materials to make in the opposite direction, then they still

need to move in a straight line to avoid accidents and waste of motion

- The ideal layout is for an industrial warehouse to give a straight line flow of

materials arriving at one end of a building and issuing dealt with in a separate

area

- This allows materials to flow in one direction and having to negotiate as few

corners as possible.
THROUGH FLOW

ISSUING AREA

OFFICE

OFFICE

RECEIVING AREA

LINE FLOW

ISSUING AREA
OFFICE

OFFICE

RECEIVING AREA
ADVANTAGES

1. Line flow layout minimizes travel and motion personnel

2. Materials arriving at one end of the building are being delt with via

different receiving area before being allocated to the bins.

DISADVANTAGES

1. Overcrowding

2. There is imprivacy for senior workers

3. The location of receiving and issuing areas may not allow date he

expansion of future programmes

T – FLOW

RECEIVING AREA ISSUING AREA

 ADVANTAGES

1. Reduces congestion of staff members

2. It easy on implementation of IT system

3. Easy inspection by staff members

4. Save on time and space can be made

DISADVANTAGES

1. It may cause accidents due to limited space

2. No space of future expansion of the firm

3. A lot of time is consumed when dealing with.

L – FLOW

ADVANTAGES

1. Cheap to decorate

2. Reduces accidents

3. Control theft via close supervision

4. Reduces errors in issuing and receiving of the materials

DISAVANTAGES

1. Requires a lot of trained personnel to operate

2. Lack of space for future expansion

Receiving area

Issuing area
U-FLOW

ADVANTAGES

1. It gives provision for future expansion and flexibility.

2. Issuing and receiving is easily and precise

3. It requires efficient use of stores and precaution that reduces chances of

loss of life and property through fire.

DISADVANTAGES

1. It is expensive because it requires a lot of constructive shelves

2. Wastage of space – requires a lot of construction space.

3. Time wasting as only one officer is required to carry all the procedures on

the store.

Receiving area Issuing area

ADVANTAGES OF STORES LAYOUTS

1. Stores layout ensures a straight line flow through the storage area with

minimum backtracking of materials and humans.

This ensures a systematic receiving and issuing operation thus receiving

any confusion that may compromise the firms competitive advantage as

well as the safety of materials and humans.

2. Stores layout also leads to minimum handling and transportations of

materials thus cutting down the handling cost for the firm and leading to

increased profits.

3. Stores layout also minimizes travel and motion for personnel. This ensures

that the personnel are able to give maximum performance as well as

eliminate incidences of accidents within the warehouse.

4. Stores layout also leads to efficient use of space and precautions that

reduce chances of loss of life and property through fire.

5. Store layout also gives provision for flexibility and future expansion.

DISADVANTAGES OF STORES LAYOUT

1. The design of the layout may have been undertaken without taking into

consideration the product, receiving and issuing procedure thus leading to

a permanent challenges of the firm.

2. The layout may technically, financially and operationally not be liable for

the firm or the type of materials been stored in the warehouse.

 3. The warehouse layout sometimes frustrates a firm’s decision to introduce

new equipments and handling procedures.

This may also apply to a change in staffing lerds which a certain layout

may not accommodate.

4. The location of the receiving and issuing areas may not accommodate

future expansion programme.

FEATURES OF A GOOD STORE LAYOUT

1. Should have an efficient waste disposal that doesn’t interfere with the

operations of the rest of the enterprise and the neighboring ones.

2. Should have provision for a standby generator especially if there is any

handling equipment that is powered by electricity

3. A good layout should posses amenities for both staff and visiting drivers

such as toilets, restaurants for drivers when their vehicles are being loaded

or unloaded, a restaurant first and bay etc

4. Should have lorry packing, maneuvering area, car pack for staff, repair bay

for both materials handling equipment and packaging.

5. Should have security facilities including a central office and a secure gate

house ot inspect vehicles entering and leaving the warehouse.

6. A warehouse should have a provision for fuel supply

7. Should allow for straight movement of goods without backtracking of

warehousing staff
 8. Should ensure single handling.

INVENTORY MGT AND STOCK CONTROL

- Stock, supplies or inventories is the tern given for all materials and goods

used in the enterprise regardless of whether they are purchased outside

the organization transferred from another branch of the company or

manufactures in house.

- Stock inventory or supplies refers to components, parts and finished

products held by a business enterprise to make possible smooth and

efficient operations of the manufacturing process.

- Inventory control allows additional flexibility supplier in planning,

production and delivery of an order.

- Inventory control also cushions the enterprise when there is interruptions

in the supply chain.

CLASSIFICATION OF INVENTORY

Inventories are broadly classified in 4 categories namely;

1. Production inventories

These are raw materials, packaging parts and components which enter the

firms production process.

2. M.R. O Inventories (maintenance Repair and Operation)

 These are maintenance repair and operation supplies which are consumed

in the production process but which don’t become part of the finished

product eg lubricant, soaps, spare parts etc

3. W.I.P (Work In Progress)

These are semi-finished products found at various stages of the production

operation

4. Finished products inventories

These are finished products that are ready for sale.

STOCK CONTROL

- Stock control or inventory control is the process whereby the investment of

the material sand parts carried in stock is regulated within pre-determined

limits sit in accordance with an organization inventory policy

- The activities of stock control includes:

1. Assessment of the stock to be held as dictated by production schedules

2. Decision of the extend of the stock to be held

3. Procurement of stock from suppliers and the lead time

4. Storage facilities available for materials carried in the warehouse.

5. Issue of materials as per requisition for various departments of the

organization.

REASONS FOR HOLDLING STOCK/INVENTORY

1. To keep down production cost – often it is necessary to set up

machines so that production runs as long as possible with optimum

capacity and this makes it possible to achieve low cost with optimum

capacity and this makes it possible to achieve low cost per unit of the

finished products.

However, there should exist a balance of low unit costs at the corresponding

high cost of holding the stock in the warehouse.

2. To accommodate variations in demand – the demand for a product is

never wholly regularly so it will vary in the short term and by season to

avoid stock outs therefore some lerd of safety stock should be held,

3. To take into account variation in supply. – Some goods are produced

seasonally and that’s when they are sold cheaply

- An organization should try to stock as much as they can during this time in

order to take advantage of the low prices.

- Additional safety stock should also be held to counter any delivery delays

by suppliers

4. Take advantage of quantity discounts. – some products are offered at

a cheaper unit cost if they are bought in bulk. This is called taking

advantages of economies of scale

5. To allow for price speculations and fluctuations – the price of

primary products can fluctuate for a variety of reasons so some companies

buy in large quantities to cater for this

The price of finished products can also drop drastically and the company

will hold its stocks awaiting for the price to stabilize.

6. To help the production distribution operation run smoothly

Here stocks are held to decouple (production and distribution)

7. To provide customers with immediate service

It is essential for some highly competitive markets for companies to

provide goods as soon as they are required.

This is only possible by having them held in a warehouse.

IMPORTANCE OF STOCK CONTROL

- In most manufacturing firms, inventory consists of the second largest

category of assets in the manufacturing process after the plant and

equipment.

- It is therefore very important that this stock is Controlled so that there is

no overstocking or under stocking both of which can lead to heavy losses.

- Well planned and effective and controlled inventory contribute to the

effective operation of a firm

Primary Importance of Stock Control includes

1. To minimize idle time for staff caused by shortage of inventory and non-

availability of production requirements.

2. To keep down capital investment, inventory carrying cost and obsolence

cost

3. Provide both internal and external customers with the required level in

terms of quantity and order fill rate.

4. To ascertain present and future requirements for all types of inventory

avoid overstocking while avoiding bottleneck in production

5. Keep cost to the minimum by variety reduction, economic lot sizes and

analysis of cost incurred in obtain and carrying inventories to come up with

the EOQ

6. Provide upstream and demonstream inventory disability in the supply chain

FACTORS TO CONSIDER IN STOCK CONTROL METHODS

1. UNIT OF ISSUE

The unit of each item has to be considered eg weight in Kgs/length in

meters liquids in litres, the unit of issue is the smallest unit used in the

quantity normally issued from warehouse .

2. PROBABLE REQUIREMENTS
 - Past material requirements combined with a change in the level of

production acts as a good guide to project future material requirements

and decide on the best method of stock control to use.

3. AVAILABILITY OF SUPPLIES

-The suppliers lead time will influence the choice of stock control method

to be applied

4. COST OF ORDERING

Th are costs associated with the ordering process

- For items of low value sufficiently large quantities should be ordered to

avoid expenses in preparing large numbers of small orders

5. RATE OF ISSUE

- Like in the case of the cost of ordering, it is important to consider the rate

of issue and the location of recipient in choosing a stock control method

STOCK CONTROL METHODS

- Organizations choose stock control methods that are best suited for their

special requirements

We have 9 stock control methods.

1. Economic order quantity (E.O.Q)

ORDERING COST
HOLDING COST

E.O.Q Raising an order

Capital storage
Communication
service risk Delivery
Receipt
Set up
* Economic order quantity (EOQ) has been used in many organizations over

the years and it is the balance point btwn acquisition (purchase order cost)

and carrying (holding cost)

- carrying cost increase as the quantity of items purchased increase but due

to economies of scale at one point the larger the order the lower the order

cost.

- However this savings through order size are up to a certain point from

where costs starts to rise.

- The balance is the economic order quantity (E.O.Q)

- The E.O.Q is the quantity where the sum of the two cost are at minimal.

FORMULAE OF E.OQ

E.O.Q = 2Db E.O.Q 2Cd

CI 1P

d= Total annual usage of material in units / annual demand product

B= Order cost in shillings

P= Price item

C=Unit of cost in shillings

I= Carrying cost as a percentage of inventory value

 QUESTION

* The cost of placing an order is sh.50 and the cost of carrying is 30% of cost

of material/inventory yearly usage is 12,000 units/pieces. The item costs 10

cents. Calculate the E.O.Q based on the formulae

E.O.Q 2Cd
1P

2 x 50 x 12,000

30% x 10

1,200,000

Total cost

Holding costs

Annual costs

Ordering cost

Qo (EOQ) Quantities
 ADVANTAGES OF E.O.Q

1. E.O.Q gives a simple mathematical formulae in the ideal batch size of

orders placed at any one time.

2. E.O.Q Has been put as part of the stock control software thus making it

part of the inventory process and can be applied with the minimum effort.

3. E.O.Q is a reliable formulae that takes into account that very small orders

are as expensive as very huge ones

4. The E.O.Q Formulae has helped to establish some important principles of

cost and cost relationships in respect to stock control

DISADVANTAGES OF E.O.Q

1. It doesn’t take into consideration, changes of unit price of material or

product

2. The formulae only gives the most cost effective order sizes if doesn’t take

into account the storage space available in the warehouse to store the

materials ordered.

3. It is not sensible to the shelf life of materials s if used without considering

such factors, it may lead to deteoration. Eg cement

2. JUST IN TIME (J.I.T)

- J.I.T as applied in stock control is a strategy that has significant effects on

stock control purchasing and suppliers.

 - This is a method of stock control where delivery of components and

materials is done as they are needed.

- This is an on-time delivery system that sometimes forces suppliers to

locate their plants close to the customers facilities

- Through this method, materials flow is co-ordinated in such a way that

excess inventory is rendered un-necessary

ADVANTAGES FO J.I.T

1. There is no capital that is held in inventory as deliveries are made when

they are needed.

- The total costs of operation is reduced

2. There is no obsolescence, pilferage etc since all deliveries are used up as

they arrive in the warehouse.

3. There is a significance improvement in inventory performance as well as

productivity of the total operation

DISADVANTAGES OF J.I.T

1. J.I.T can only apply in situations where delivery infrastructure us perfect

as any delay in delivery can bring production to a half since there is no

stocks held for emergencies in a warehouse.

2. In most cases J.I.T is used to complement other stock control methods as

it is not really practical to use J.I.T alone.

3. LOT FOR LOT (LAL)

 - This is where you order exactly the net requirements suggested by MR.F

detailed schedule of material needed in production for each period.

ADVANTAGE

1. It minimizes the amount of stock held but can result to high ordering

delivery and administrative cost

4. STOCK BIN CARD

- Bin cards are periodically inspected

- Stock position is reviewed and action form replenishment is taken from

time to time.

- This is a very simple system and involves no problem either for the

reviewed or for those who are responsible for the replenishment and

control of inventory.

5. MIN-MAX APPROACH

- The basic method of controlling stock by quantity is by the means of fixing

for each commodity stock lerds which are recorded in the stock control

system and subsequently used as a means of indication when some action

of replenishing is necessary.
 Masc

Re-order

Hastening

Min

- Typically there are four levels.

1. Minimum level

- This is the stock level in units of issue below which the stock of any item

should not be allowed to fall.

- It is also called danger level and should trigger urgent action to replenish

the stock.

2. Re-order level

- This is the amount expressed in units of issue at which ordering action is

triggered. This level takes into consideration, suppliers lead time and

delivery inspection process to ensure that sock is available for consumption

before they fall below minimum level.

3. Hastening level

- This is the amount expressed in units of issue in which suppliers are

requested to hasten / quicken to make an early delivery in order to avoid

fall in below minimum level

- This level falls btwn minimum and ordering level.

4. Maximum level

- This is the quantity expressed in units of issue above which stocks

shouldn’t be allowed to rise.

- The motive of setting this level is to curb excessive investment in inventory

as well as controlling obsolescence.

- This also controls shortage of storage space in the warehouse and the

danger of deterioration of perishable goods.

6. ABC ANALYSIS
 - ABC Analysis is an inventory technique in which the items in inventory

are classified according to where the results will be greater

- ABC Analysis is based on the realization that 75% of the total annual

consumption value account for less than 10% of the total number of items

- This items are of vital importance and need close and careful attention

by the warehouse manager

- This items are classified as a-Items.

- The organization may also realize that 10% of the total annual

consumption value consumed accounts for more than 75% of total the

number of items which may only need a casual attention and are classified

as C-Items.

- The other items lying btwn this tow extremes are classified as B – Items

and require less careful attention compared to item –A but more careful

attention than items – C

- ABC is an acronym for all A, Better-B, Control – C

Ie A Always control the best, the n better control (B) (C) good control

- Typically rules of ABC Categorization state.

ITEM A

- Close control

- Frequent check on schedule revision

- Little or zero safety stock

 - High turnover goals

ITEM B

- Moderate control

- Check on demand changes

- Moderate safety stock

- Moderate turnover goods

ITEM – C

- Loan control

- Visual check or two-bin system

- Large safety stock

- Low turnover goods

ADVANTAGES OF ABC ANALYSIS

1. It becomes possible to concentrate all efforts in areas which need

genuine attention

2. This method produces rewarding results at the same time it involves

minimum control

3. It is the most effective and economic method as it is based on selective

approach.

DISADVANTAGES

1. ABC Analysis can achieve its objectives only when there is a popular

standardization of materials been carried in the warehouse.

 2. Sometimes the items classified as C become more important than A –

items requiring more and constant attention. This may call for a total

review for the whole system

3. Lack of a periodic review of the importance of the items may lead to the

use of a ABC Analysis system that is outdated so that items that need

close and constant control are ignored leading to heavy losses due to

pilferage of such items.

7. PERIODIC REVIEW METHOD

- In a warehouse the review of stock levels may be done using action level

method (minimum, maximum approach) where the warehouse staff realizes that

the stock levels of a certain item have to follow re-order level or minimum level,

the n an order for the item is place.

- This method leads to many small orders that don’t benefit the economies of

scale, periods review or cyclical provisioning may be introduced.

- This involves examining either the physical stock or the stocks records for a

particular class of commodities of regular intervals and taking simultaneous

action for all the items requiring replenishment

- This may be done at interval of one month 3 months or whatever other

intervals is found satisfactory to practice.

ADVANTAGES

1. The organization is able to identify a number of items that need

replenishment thus benefit from economies of scale when placing orders

for all the items

2. Many small orders are avoided which reduces ordering cost at the end of

the financial year.

DISADVANTAGES

1. If there is unexpected variation in consumptions or delivery are seriously

delayed, then there is a danger of stock out

2. If consumption unexpectedly declines, or if deliveries are too far advance,

there could be a problem in storage space.

MATERIAL REQUIREMENT PLANNING (M.R.P)

MRP is a stock control technique that directly affects purchasing schedules. In

M.R.P the (dependent) demand for components of manufactured product

depends on the forecasted (independent) demand for the finished product.

- The MRP Process begins with the production plan. This plan is the broken

into a master production schedule, which is basically a detailed statement

of requirements for end items by date (planning period) and quantity the

master production schedule is “exploded”

- Into actual quantities required which are the quantities that are ordered

for from the suppliers

- MRP Produces ’ planned orders” that tell inventory planning and control

what and how much to order. When to order and when to schedule

delivery, capacity requirements planning determines capacity which will be

required by work center, each period, to meet production plan

- MRP Starts with a master production schedule (MPS). The information

from the MOPS Comes from orders received and forecasts of demand

using demand forecast techniques. MRP Therefore has several

components in order to succeed such as:

I. THE MASTER PRODUCTION SCHEDULE

- Using the inputs from marketing and sales forecast demand for quantities

of the final product over a planned time horizon.

II. THE BILL OF MATERIALS FILE (BOM)

- This is also known as the product structure which lists all the items that

comprise reach assembly and subassembly that make up the final product.

The BOM gives details of the material requirement of each finished product

at every level.

- BOM is then used to identify the inventory requirements for the production

of the items required in order or forecasted demand.

 III. THE INVENTORY FILE

- This is the record of individual items of inventory and their status. The file

is kept current by the outline posting of inventory events, such as the

receipt and issue of items and inventory of their return to the store.

IV. THE MRP PACKAGE

- This uses the information form MPS, BOM and inventory file to explode

and cascade the end product into its various assemblies, subassemblies or

component at various levels of production.

ADVANTAGES OF MATERIALS RESOURCE PLANING.

1. More reliable and faster delivery times.

2. Reduction in inventory – inventory is only acquired for specific

production process.

3. Improved production (the material is more likely to be there when

needed)

4. Reduction in parts shortages and improved inventory accuracy levels.

5. Better planning and communication of future needs to suppliers

6. MRP Schedules can be used for planning and other logistics activities.

DISADVANTAGES OF MRP

1. Reduced flexibility to deal with changes

2. Needs a lot of detailed and reliable information

3. Systems can become very complex and not user friendly

 4. The order sizes suggested by MRP can be inefficient

5. MRP May not recognize capacity and other constrains

ENTERPRSIE RESOURCE PLANNING (ERP)

- Enterprise resource planning is an improvement of MRP. While MRP tries

to acquire material to meet sales orders ERP is applicable to all

organizations and allows managers form all functions or department to

have a consolidated view of what is or is not taking place throughout the

enterprise.

- ERP consolidates information from all departments that is necessary in the

decisions of the quantities to be ordered.

- These departments include finance, logistics, manufacturing supplier

management as well as human resource.

- The implication of each departments function in included so that each

order shows how each department is affected by this order.

ADVANTAGES OF ERP

1. Faster Inventory Turnover

Inventory turnover increases and there is a reduction in inventory costs.

2. Improved Customer Service

There is an increased order fill rate by providing the right product in the

right place at the right time, thus increasing customer satisfaction.

3. Better Inventory accuracy and fewer audits

 An ERP system can increase inventory accuracy to more than 90% while

reducing the need of r physical inventory audits .

4. Reduced set-up timer

Grouping similar production joins together, ensuring co-ordination of

people, tools and machinery, together with then efficient use of equipment

and minimizing downtime by efficient equipment maintenance.

5. High quality work

ERP Software, with a strong manufacturing component and improving

providing the information required increases production efficiency and

eliminates rework.

6. Timely revenue collection and improved cash flow.

ERP gives manufacturers information on accounts that are overdue so take

action before problems occur which improves cash flow.

DISADVANTAGES OF ERP

1. ERP implementation is difficult because implementations turnover

fundamental change from a function to a process approach.

2. ERP Systems are expensive especially when the customization of

standard production processes.

3. The cost of training staff to use ERP can also be high.

 4. The implementation of ERP Systems can cause staff stress, resistance

to c hanger o information that should be shared among few staff is

available to all and this can be risky when it is shared with rival firms in

the industry.

MATERIAL PRESERVATION

Meaning of Material Preservation

- Most materials held in a warehouse will deteriorate with time.

- Material preservation is any activity that is undertaken with the aim of

maintaining materials in the condition that they were when they were

delivered or manufactured.

- Material preservation controls natural conditions that cause premature

deterioration and damage.

FACTORS TO CONSIDER IN SELECTING MATERIALS PRESERVATION

METHOD

- The methods to be used in materials preservation are diverse, the choice

of the method to be used for preservation is affected by factors that have

to be put into consideration while choosing the method.

- This factors include;

1. Nature of materials to be preserved

 The nature of materials to be preserved clearly dictates the choice of

preparation method to be used some materials are in liquid form others

are solid, some are like vegetables and fruits as used in food processing

factories are perishable and require that they be preserved in syrup

forms, cement solidities when placed on the floor etc.

2. Cost of Preservation method

Some preservation methods are expensive which can lead to a firms

product losing their competition in the market.

Each firm should therefore go for the most efficient effective and cheap

preservation method.

3. The duration before consumption

- The duration before materials are consumed is another factor to be

considered before settling on a preservation method.

- The rate of consumption against the rate of deliveries dictates how long

materials remain in the store and thus the choice of preservation to be

used.

4. The inventory movement

In a FIFO method, goods don’t remain it the warehouse for a long

period of time, while in a LIFO Method some goods may remain in the

warehouse for a long time this effecting the choice of the preservation

method.
 5. Govt. health and Environmental requirements

The preservation method to be used in material must be compliant to

the govt. health and environmental requirements.

6. The Reaction of Materials to Environment conditions

- An example is timber which rots when exposed to wet conditions.

- Timber is therefore preserved under open ended sided shelter

- Timber boards shouldn’t be stacked but interleaved with scanting to that

there is air circulations in all the boards.

- Seeds/grains should also be free from any moisture as they germinate and

are attacked by afro toxins which cause kidney and brain damage.

IMPORTANCE OF MATERIAL PRESERVATION

1. Protects material deterioration

2. Reduces the cost

3. Adds value & quality of material

4. Helps in smooth flow of material in store

5. Material are safe from damage and spoilage

6. Goods can be able to be ordered in bulk

7. Goods should be preserved in long lasting of rent purpose of future use

8. Ensure that the final customers are able to maintain products in their good

conditions.
 MATERIAL PRESERVATION METHOD

1. ‘COCOOLING’ – This is a preservation method that is used on electronic

and expensive machines and equipment that need to be kept in good

conditions for a long period of time (yrs)

2. DRYING – This is a method used for serials and other edible material

such as tea and coffee. In their dry state and if kept in a dry and

ventilated room these materials can remain in good condition for long

period of time.

3. PRESERVATION DUSTING – This is common in serial protecting them

from attacks from weevils.

4. SMOKING – This is an ancient method of preservation that is still in use

today. It is used to preserve fish , meat.

5. OILING AND GREASING

- Most metallic equipment is made from iron and steel and is prove to

rusting and corrosion.

- To preserve them, a coating of oil, grease or some slashing compound are

applied to preserve items through brushing aerosol, spraying or dipping.

6. PAINTING

- It provides a permanent preservation and is done during manufacturing,

galvanizing or audising which all serve the same purpose eg galvanize

dumm mabati
 7. REFREGERATION – Keeping materials frozen for long period of time

prevent them from bacterial and fungi attacks eg foods, vaccines and

certain medicines.

8. PACKAGING – Apart from the basic function of protecting material while

on transit, packaging can also act as a method of preservation eg pressed

airtight packaging to protect from air eg yeast , dustproof packaging for

stationery water proof barrier for salt.

9. ROOM TEMPARATURE – this is the most basic preservation method and

all firms should strive to keep their warehouses in room temperature and

well ventilated. Which is the ideal storage condition for most materials.

* Definition of material preservation

Maintaining the original value and quality of the material so as to maintain the

storage cost, production cost and production quantity.

* aims of preservation of materials

1. Preservation helps to keep the materials safe from all kinds of damages and

spoilage.

It protects the materials so as to maintain their values and quality.

It state that the material which have been carried in the store are made available

be as and when required.

 PACKAGING

- Packaging is any material of any a nature used for the containment,

protection, delivery and preservation for goods from producers to

consumers.

- Packaging as a function in material handling creates efficiency is

influenced by package design initialization and communication

characteristics.

- Packaging can then be defined as any material used to protect finished

goods or products while on transit.

PURPOSE OF PACKAGING MATERIALS

1. Physical protection – from mechanical shock and extreme temperatures.

2. Barrier protection – from dust, water, air etc

3. Containment agglomeration – small objects grouped together into one

package which eases in issuing and receipt

4. Information transmission – packages and labels communicate how to use,

transport, recycle, disposal of package or product etc.

5. Marketing – labels are used by marketers to encourage potential buyers to

buy the product

6. Security – packaging plays an important role in reducing security risks

during shipment

7. Ease receipt and issue.

FACTORS CONSIDERED IN SELECTING PACKAGES FOR MATERIALS

1. Nature of the product

The nature of the product dictates the type of packaging to be used.

Technical aspects of the product requires that packaging should extend

the shelf-life of a product.

2. Cost

The cost should be minimal not too expensive to make the product being

packaged too expensive in the market.

3. Government and environmental requirements

Certain products need to be packaged in certain quantities eg wines and

spirits the minimum package is 250 ml.

Packaging should be disposable in an environmentally appropriate way.

4. Presentation aspect

Packaging should increase sales by creating a brand damage that a buyer

instantly recognizes.

5. Chemical composition

Packaging should be used to avoid contamination.

6. Expected handling procedures

Transporting, stacking, sampling are some of the consideration in the choice

of packaging.
 TYPES OF PACKAGES

1. Drums – fuel, chemicals, molasses, very heavy metals.

2. Boxes/cartons – used for most consumer goods eg soaps, biscuits, cereals

etc

3. Crates – mostly used for glass bottle packages eg soft drinks, alcohol,

perishable farm produce tomatoes etc.

4. Sacks or bags – most farm cereals, cement ,sugar, fertilizer etc

5. Containers glass or plastic – milk, syrups, buttons, sweets

6. Wrappers – sweets, chocolates.

ADVANAGES & DISADVANTAGES OF PACKAGING MATERIALS

ADVANTAGES

1. Protects products from damage during transport, warehouse natural

conditions like heat etc.

2. Enhances handling procedures/ encourages standardized handling

3. Assists in communication of instructions about use and handling

instructions

4. Assists in marketing and advertising.

5. Enhances security

6. Reduces storage space

7. Faster in handling
 DISADVANTAGES

1. Packaging is costly and adds to the cost of the product

2. Methods of disposing packaging materials has led to environmental

hazards

3. Some packaging materials affect eh quality of the product.

4. Increasing weight to the product hence increasing with of the product.

5. Some packaging materials are used to misdirect people so as to increase

their sales.

MATERIALS HANDLING

Definition – material handling is the term given to the techniques used in the

storage and movement of materials in the warehouse.

These includes the methods and handling equipments

The concept of materials handling is a function responsible for co-ordination of

the storage and movement of materials from one point to another with the

intention of minimizing cost.

OBJECTIVES OF MATERIAL HANDLING

1. Ensure the safety of warehousing staff – improve working conditions

2. Maintaining the quality of materials being handled

3. Saving on cost

4. Saving on time
 5. Increase capacity

6. Improve customer service

FACTORS CONSIDERED IN SELECTING MATERIAL HANDLING

EQUIPMENT

1. COST – The cost of the equipment should be compared with the savings and

the benefits to be accrued in using the equipment.

2. AVAILABILITY OF SKILLS TO OPERATE IT – An organization should as much

as possible procure standard handling equipment that can easily be handled

by any skilled worker.

3. MAINTENANCE – An organization should consider warranties, guarantees,

servicing and availability of spare parts for the equipment.

4. OPERATION LIFE – The capital investment on the equipment should be

compared with its operation life to see where there is economically viable for

an organization to make the investment.

5. OPERATION SPEACE AND ENVIRONMENTAL REQUIRMETNS –

some equipments require too much space for operations which make them

economically not viable.

6. NATURE OF MATERIAL BEING HANDLED

The nature of the material being handled the equipment to be used.

 PRINCIPLES OBSERVED IN MATERAIL HANDLING

- In any stores one of the major problems is material handling

- A good deal of labour and money can be saved by using the right method

and the proper equipment in the movement of material

- This can be done through

1. Eliminate unnecessary handling

2. Minimize on manual handling and use mechanical handling equipment

where possible

3. Use the right equipment for handling materials to avoid damage and

reduce on costs.

4. Handle materials in the largest convenient unit load using the quickest

means over the shortest route

5. Make full use of equipments available.

HOW TO ELIMINATE UNNECESSARY HANDLING

1. Arrange with suppliers to deliver material in standard size in containers

suitable for unloading storing and issuing.

2. Hardware items like nuts, bolts etc can be obtained in cartons of standard

quantities. This could be stored and issued in their original containers.

 3. Arrange for suppliers to deliver goods to user department s instead of

delivering to the warehouse only but for them to be taken to the user

departments.

MATERIAL HANDLING METHODS

There are 3 methods

1. Manual

2. Mechanical

3. Automated

1 manual

- For items that aren’t too heavy and being moved for short distances, then

manual handling is used eg. Wheelbarrows, trolleys, manual, carts etc

ADVANTAGES

1. It is cheap

2. Saving time

3. Readily available not much capital investment is made

4. Recruitment is flexible

DISADVANTAGES

1. Can be less efficient

2. Slow

3. Not convenient for heavy materials

 4. Prone to accidents causing damage and waste

5. Prone to pilferage and thiefery.

MECHANICAL

These are poser driven equipments eg forklifts, tracks side loadings, reach trucks

overhead cranes & conveyer.

ADVANTAGES

1. Saving on time

2. Efficiency

3. Convenient for handling materials that can’t be handled manually

4. Can be used in environments that can be dangerous for humans

DISADVANTAGES

1. Expensive to hire or buy

2. Not flexible

3. Special skilled to operate equipment

4. Prone to breakdown and need maintenance

3. AUTOMATE

These include automated guide vehicles (A.G.V)

This is a new technology mainly used in car assemblies in developed

economies and are guided by radio centre

 Robots are also used in storage and distribution which is reputative but needs

to be undertaken with high precision and they are a lot faster than manual

and mechanical methods.

STOCK TAKING

- Stock taking is the practice of physically verifying the stocks/inventory

available in a warehouse/store.

REASONS FOR STOCK TAKING

1. Stock taking practice gives the management of a business enterprise the

financial value of the capital that is held in the form of stock/inventory for

the purposes of preparing annual financial statements.

2. Stock taking helps to control the rate of obsolescence and slow moving

stock by identifying stocks that have not moved or are moving very slowly,

in order to assist the purchasing department in future.

3. Stock taking helps to control theft and pilferage that can go on for a long

time un-noticed

4. Stock taking assists an organization to compare the balances in the IT

system with what is physically available, thus making corrections to any

errors done. This is done by revealing any discrepancies in the issuing and

receipts postings.
 IMPORTANCE OF STOCK TAKING TO AN ORGANISATION

1. Obsolescence is controlled by identifying slow moving stock and coming up

with ways of disposing them to create storage space for fast moving

goods.

2. By giving the financial value of capital held in stocks an organization is

able to come up with ways to ensure that capital is not held for too long.

In future by changing purchasing patterns depending on the rate of

movement of stock.

3. Stock taking helps an organization identity wrong storage methods that

results in stock deterioration and make corrections.

4. Stock taking involves staff from the departments which helps promote

integrity in an organization and holding the warehousing department staff

accountable

5. Stock taking compares physical availability of stock and the records so that

members or warehousing staff doing these activities are keen in their

duties knowing that they would be held accountable.

 REASONS FOR DISCRIPANCIES

1. Incoming materials may be taken straight to the user department and

consumed after receipt therefore no issue done.

2. Recording incorrect quantities

3. Posting done on the wrong item.

4. Errors in addition and subtraction in manual recording

5. Pilferage and theft.

6. Actual shortage and excess caused by human error in receipt and issuing.

FACTORS CONSIDERED WHEN CONDICTING STOCK-TAKIGN EXERCISE

1. A programme is drawn up and agreed with all concerned eg finance

department.

2. All personnel concerned must be instructed in their duties

3. Appoint one person to control whole operation

4. During stock taking (when in progress) the store house should not open

for formal business.

5. Take all normal stock including packages, scrap residues items on loans

and goods under inspection.

6. Record separately damaged detonated or used items.

7. Make a person taking stock responsible for a particular section

 8. Any item held which is not property of business ought to be labeled in

advance

9. Special arrangement of total list of items belonging to the business and are

not in the premises

10. Return to store all item on ‘loan’ internally & externally before stock

taking begins.

11. Show the method of check, count weight measurement or

estimation on the stock sheet for any item.

12. The method of pricing should be known , possibly enter all price

items in terms of unit issue

13. What widely dispel

METHODS OF STOCK TAKING

- There are two methods of stock taking

1. Periodic/fixed stock taking

2. Continuous stock taking

PERIODIC / FIXED STOCK TAKING

 - This is a formal system where the stock taking exercise is done after a set

period of time.

- This may be done quarterly , half-yearly or annually

- In this system business is closed for the exercise.

ADVANTAGES

1. Makes each person responsible for a particular section or clearly defined

an area of the store hse recording how each is found in the area.

2. Records of the damaged, deteriorated or used item is done separately.

3. Shows the method of check ie complete measurement or the estimation of

the stock sheet for an item

4. All personnel conserved must be instructed on their duties.

DISADVANTAGES

1. The business is closed down for the stock taking to be done. Making it

more difficult to investigate discrepancies.

2. CONTINOUS STOCK TAKING

- In this method the stock taking exercise is done continuously without

necessarily having a set time or closing business.

 - Members of staff continuously count the physical stock balance and

compare that with the records.

PROCEDURES OF STOCK TAKING

The procedures in stock taking include 3 steps

1. Preparation for stock taking

2. Stock taking

3. Preparation of reports on stock taking process

1. Preparation of stock taking.

- This lays a foundation for the stock taking exercise

- It will initially involve educating the staff members of what is expected of

them, assigning duties for staff members involved n the exercise and

informing clients on the close of business for the exercise.

- Acquisition of stationery to be used for the exercise is also undertaken and

engaging supervisors if they have to be outsourced

- Document are prepared to be used for the stock taking exercise the date

and duration is communicated, all stock records are updated.

- All borrowed/loaned are returned to their respective locations.

APPROACHES TO STOCK TAKING

- There are three approaches to stock taking

 1) Blind

2) Team

3) Store keeper

1. Blind - this is an approach where everyday throughout the stock taking

exercise, stock members are assigned to departments/sections where they

will do the stock taking.

2. Team work – This is an approach where all staff members are divided into

teams who are then assigned various departments.

STOCK RECORDING

Meaning of stock records.

- Stock records is the term given for the function of capturing and storing

information in regard to the inventory held in the warehouse or office

space of a firm.

- The practice of keeping stock records serves the purpose of recording and

controlling the movement of inventory in and out of the warehouse.

Importance of stock recording to an organization

1. Records give at a glance the quantity of a specific item available so that

warehousing staff don’t have to keep on counting physically the items to

know how many are available.

 2. Stock records link the physical availability with the organizations financial

systems by costing each item thus the organization is able to calculate

how much working capital list held in stock.

3. Stock records act as proof for placing of orders for those items that need

replenishing.

4. Stock records are used in the process of stock taking

5. Stock records are used in the verification of invoices from suppliers for

payments

6. The stock taking personnel use stock records to compare what is physically

available in the warehouse and what is in the systems to make corrections

in the discrepancies.

Factors consider when selecting stock recording methods.

1. The cost – This is basic and the choice of the stock recording system is

depended on the financial might or ability of an organization in comparison

with the cost of procuring the system.

2. The size of the organization – The size of the organization whether

large or small the stock held whether large or small will be proportion to

the system selected by the organization

 3. The value of the stock – the value of the stock is also a factor to

consider as low value stock can’t be recorded using a very expensive I.T

systems and vice versa.

4. The number of users – The number of users will determines the choice

of the stock recording system as many users require an easy system that

doesn’t need special training and vice versa.

5. Possibility of feature expansion – for an organization that intends to

expend the recording method should have room for expansion.

6. The nature of business the organization is engaged in – whether

manufacturing distribution or service, the organization should choose a

stock recording method that is compliant to its operations.

STOCK RECORDING METHODS

There are three methods of recording stock

1. Manual – Stock records cards are kept together in one place and

information is recorded on the card for every receipt and issue translation.

2. Mechanical – this is a mechanized system where stock handling

equipment is used as a basis for stock records.

3. Automated – this is the system where an IT/Computerized system is

used to maintain stock records. Networking can be done so that a

transaction done in one department reflects in all the other departments.

 SAFETY AND SECURITY

- The warehouse environment necessities a variety of operations: the

manual handling of goods, forklifts, tracks loadings and unloading,

reversing and manufacturing of vehicles, picking and packing goods in

vehicles etc.

- All those operations involves exposing staff to bodily harm and the

business enterprise suffering loss due to security lapses during the

operations.

- Other hazards such as collisions, vehicles overturning equipments

malfunctioning, lack of protective clothing while handling dangerous goods

etc must all be considered particularly when working in a time pressured

customer service environment.

The WORK PLACE REGULATIONS ACT Set prescribing standards for the work

place, the equipments, devices and systems within it.

- Standards are laid down covering a number of practical aspects of the

workplace environment. This aren’t specific in terms of what is meant for

each work place but a health and security officer should decide what

systems to put in place after examining the circumstances in the business

enterprise.
 - Safety and security measures therefore relates to the safety of the staff

and the security of the warehouse and stock

SAFETY AND SECURITYL MEASURES FO WAREHOUSE STAFF AND

STOCK

MEASURES

1. Maintenance of workplace, equipment devices and systems.

The workplace equipments etc. this must be maintained by cleaning, and

any appropriate servicing in order to keep them in an efficient state, order

and good repair.

2. Ventilation

- Effective and suitable provision must be made to ensure that any enclosed

workplace is ventilated by a sufficient quantity of fresh air.

3. Temperature in indoor work places

- During working hours the temperature in all work places inside building

must be reasonable.

4. Cleanliness and waste materials

- Every work place and furniture, furnishing and fittings must be kept

sufficiently clean and waste material must not be allowed to accumulate

5. Lighting

- Every work place must have suitable and sufficient lighting.

6. Room dimensions and space

- Every room where people work must have sufficient floor area, height and

un-occupied floor space for the purpose of health safety and welfare.

7. Work station and sitting

- Every work station must be arranged so that it is suitable both for any

person at work in the work place and for any work which is likely to be

done there.

8. Condition of floors and traffic routes.

- Every floor in the workplace and the surface of every traffic route should

be suitable for the purpose for which it is used.

9. Falls and falling objects

- Measures should be taken to prevent incidences occurring. Any area

where this is a risk to health and safety should be clearly marked. Tanks,

pits and structures where there is a risk of a person falling should be

clearly marked covered.

10. Windows.

- Where appropriate, safety glass should be used where windows can be

opened or closed this must not present a health or safety risk construction

should allow for windows to be easily cleaned.

11. Doors and gates

 - Must be suitably constructed powered doors often used in warehouses

must have effective features to prevent them from cause in injury and

should have a manual backup option.

12. Sanitary convenience

- Washing facilities and drinking water should be available at accessible

places.

13. Facilities for changing clothes

- This should be provided in all case where a person has to wear special

clothing for the purpose of work.

14. Facilities for rest and to eat meals

- Must be provided at readily accessible places and makes provision for

those discomforted by tobacco smoke and the provision of suitable

facilities for pregnant women and nursing mothers.

FACTORS CONSIDERED WHEN SELECTING STOCK TAKING METHODS

* Identifying supply needs

- The supply supplied in the warehouse should be in accordance with the

demand of customers.

* Price when choosing supplier.

IMPORTANCE OF SAFETY AND SECURITY

1. Reduce the number of injuries

2. Ensure the staff are in a conducive environment ie fresh air